Is the View from the Eurotower Purely European? - National Divergence and ECB Interest Rate Policy

@article{Heinemann2002IsTV,
  title={Is the View from the Eurotower Purely European? - National Divergence and ECB Interest Rate Policy},
  author={Friedrich Heinemann and Felix P. H{\"u}fner},
  journal={Monetary Economics},
  year={2002}
}
The official view on ECB monetary policy claims that monetary decisions are based solely on average data for the euro zone and that diverging regional developments are disregarded. However, experience from other two tier central banks and theoretical considerations suggest that this official view cannot be accepted without empirical testing. A generalised monetary policy reaction function is developed which allows for an influence of regional divergence. The empirical tests are based on… 

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